July 2012

Unemployment

San Francisco's unemployment rate rose to 7.8 percent in June, up from 7.4 percent in May—though still significantly below its June 2011 level of 9.0 percent.

California's unadjusted unemployment rate dropped slightly to 10.7 percent in June, while the national rate edged slightly higher to 8.4 percent. In the Bay Area, Marin County continues to boast the state's lowest unemployment rate, at 6.6 percent. San Mateo has California's second-lowest countywide unemployment, at 7.1 percent, and San Francisco and Napa County tie for third place at 7.8 percent. At 8.7 percent, Sonoma and Santa Clara tie for eighth-lowest unemployment among counties statewide.

Bay Area Unemployment Rates
(Data Not Seasonally Adjusted)

County

Jun-12

May-12

Jun-11

Alameda

9.5%

9.1%

10.8%

Contra Costa

9.4%

9.0%

10.9%

Marin*

6.6%

6.3%

7.7%

Napa

7.8%

7.5%

8.9%

San Francisco

7.8%

7.4%

9.0%

San Mateo

7.1%

6.8%

8.4%

Santa Clara

8.7%

8.2%

10.1%

Solano

10.5%

10.1%

11.8%

Sonoma

8.7%

8.3%

10.1%

*Lowest in state. Source: CA-EDD

Source: Bureau of Labor Statistics

Housing

Median home prices across the nine Bay Area counties reached their highest levels in nearly four years during June, due in large part to factors such as shifts in the types of homes selling, improved availability of mortgages and ultra-low interest rates on home loans. This was the 12th consecutive month sales in the region increased on a year-over-year basis. The median price for all new and resale houses and condominiums was $417,000, up 4.3 percent from its May level of $400,000 and 10.4 percent from $377,750 in June 2011.

Foreclosure resales accounted for 18.1 percent of all Bay Area resales in June, down from May's revised share of 21.4 percent, and 26.1 percent a year ago in June 2011. It is the first time this share has dipped below 20 percent since January 2008. At their peak in February 2009, foreclosure resales comprised 52 percent of all resales in the region. The monthly average for foreclosure resales over the past 17 years is about 10 percent.

Absentee buyers purchased 23.4 percent of all Bay Area homes that sold in June. This is down from 24.4 percent in May and up from 20.0 percent a year ago. Buyers who appear to have paid all cash accounted for 27.5 percent of sales in June—down from 28.3 percent in May but up from 26.0 percent a year ago.

All homes

Sales Volume

Median Price

Jun-11

Jun-12

%Chng

Jun-11

Jun-12

%Chng

Alameda

1,584

1,755

10.8%

$351,000

$375,000

6.8%

Contra Costa

1,692

1,704

0.7%

$268,000

$315,500

17.7%

Marin

313

332

6.1%

$650,000

$700,000

7.7%

Napa

118

146

23.7%

$310,000

$320,000

3.2%

Santa Clara

1,855

2,011

8.4%

$511,250

$550,000

7.6%

San Francisco

533

586

9.9%

$665,000

$713,500

7.3%

San Mateo

664

756

13.9%

$580,000

$570,000

-1.7%

Solano

707

621

-12.2%

$177,500

$200,000

12.7

Sonoma

532

666

25.2%

$299,000

$318,000

6.4%

Bay Area

7,998

8,577

7.2%

$377,750

$417,000

10.4%

Source: DataQuick News

Office Market

The overall vacancy rate in San Francisco's main tech market and Central Business District (CBD) declined between Q1 and Q2 of 2012 to 11 percent—one of the country's lowest. Analysts say San Francisco's robust tech sector is largely responsible for this, as well as for an increase of 15.1 percent in non-CBD submarket rental rates, to $45.99 per square foot, during the first half of this year. CBD Class A direct asking rents also increased by 10.5 percent to $51.60 per square foot in the second quarter. Citywide, Class A direct asking rents rose 10.4 percent to $50.58 per square foot.

Q2 2011

Q2 2012

Y-O-Y Change

12 Month Forecast

Overall Vacancy

13.6%

11.0%

2.6pp

↓

Direct Asking Rents (psf/yf)

$38.51

$47.49

23.2%

↑

YTD Leasing Activity (sf)

3,354,017

3,916,897

16.8%

↑

Source: Cushman & Wakefield

Source: Cushman & Wakefield

Sustainability

For the third year in a row, Site Selection's Green Guide has named California the "Top Sustainable State" in the country based on criteria such as its number of LEED certified buildings, renewable energy use and generation, green incentives, use of alternatively-fueled vehicles, and energy efficiency scorecard rankings.

The San Francisco-Oakland-Fremont region also led Green Guide rankings, as "Top Sustainable Metro" nationwide. Criteria considered for the list of sustainable metropolitan areas included green industry projects tallies, green incentives, and number of LEED projects per capita. Four of the top ten metropolitan areas were in California, including San Jose-Sunnyvale-Santa Clara, which ranked ninth.

Growing Tech Center

Since early 2010 the number of workers in San Francisco's tech sector has grown by 13,000 to total 44,000. During the same time period, 150 more technology firms moved to the city, bringing the total number to 1,850. This growing trend is helping eliminate commutes to Silicon Valley for many San Francisco-based workers and, analysts believe, strengthening the city's housing and rental markets.

Additional signs of a robust tech sector in the city: venture capital for San Francisco companies has risen 41 percent since this time last year, and currently San Francisco has the highest tech job growth in the nation—about double that of second-and third-place markets New York City and Silicon Valley.

Area Development assessed factors in corporate location selection for their 8th Annual Consultants Survey. Respondents named highway accessibility as their first priority in selecting locations, with a combined importance rating of 98.3 percent. They ranked labor cost as their second-most consideration, giving it an importance rating of 96.3 percent.

Thursday, July 26, SFCED and Gensler will present the key results of their joint "Spaces for Growth" projects—a research endeavor designed to identify new areas for growth among tech companies in the competitive environment of San Francisco and its rising rents and scarcity of space.

We evaluated spatial needs of tech companies, desirable neighborhood characteristics, and availability across the city to answer questions such as, Is the overheated market of the dot-com days returning? Are there spaces within San Francisco where evolving firms can expand? Where are these spaces? and What can growth strategies in this context look like?

SFCED and Gensler evaluated neighborhood characteristics, tech suitability and availability across the city and found some great spaces to share with the community at an evening event. Come meet up with other tech companies to explore the new hot spots in San Francisco!

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